ABSTRACT: Through the lens of a traditional rationalist principal-agent
framework, the development of the European Community's competition
policy could be read as a straightforward story of agency loss.
However, with the recent overhaul of competition policy, which the
Community presented in terms of a decentralisation, the story seems to
have changed as we are confronted with the uncommon event in which an
agent (the European Commission) returns some of its powers to the
principals (the member states). This paper resolves the puzzle by
highlighting the role of the Commission and of European courts. It has
become part of the Commission's strategy to pursue its objectives
through legally non-binding instruments such as notices or guidelines
or even through co-operation in networks. For the Commission, these
instruments have the advantage that they do not need the approval of
the Council of Ministers or the European Parliament. With the
Commission's promotion of new modes of governance, the link between
sectoral governance (in terms of regulation specific to competition
policy) and the governmental shadow of hierarchy shifted, to an
ever-larger extent, to the mechanism of judicial review by European
courts. Alongside this shift, the character of judicial review has
changed in the direction of judicial control, as European courts no
longer restrict themselves to review of the legality of Commission
actions, but engage in assessing the facts themselves.